What Are Bilateral Agreements?

Written by J. Hirby and Fact Checked by The Law Dictionary Staff  

You might have heard of bilateral trade agreements between different countries, but is that the same as a bilateral agreement? The prefix "Bi" means two. But what is the exact definition of a bilateral agreement?

"What is a Unilateral Agreement?"

"Uni" means one. So a unilateral agreement must involve "one of something." An agreement is between two parties. So what is the "one" thing that defines the unilateral agreement?

A unilateral agreement is where one party makes a promise, declaration or offer. For example, a radio station DJ tells the audience that he will pay a listener $100 if he can answer a question. The radio station is the promisor and the listener is the promisee. The two sides of the agreement are not equal or mutual. The promisor offers money and the promisee must offer an answer.

Under the unilateral trade agreement, only the promisor is bound by consideration. The promise is bound by consideration of the performance of the obligations.

The unilateral agreement "may or may not occur." It is not guaranteed. One side offers something of value to anyone who can fulfill the other side of the agreement. These occur every day at grocery stores or restaurants. Many are unspoken and implied.

"Two Promises Involved in Bilateral Agreement"

The bilateral agreement involves two parties each promising to do something. The parties can be individuals, groups, businesses or governments. Somehow, the two actions are mutually supportive, binding and inclusive. Both parties fulfill roles as the promisor and the promisee.

A bilateral agreement can be "positive" or "negative" - you "will" or "will not do something." Each party is sufficient consideration for the bilateral agreement. The concept of "mutuality" is important for bilateral agreements since both parties must fulfill their promise for the contract to be fulfilled.

"Breach of Contract"

The unilateral and bilateral agreements are enforceable in courts. The agreements change the status of the parties to it. If someone was not legally required to do something, a bilateral agreement promise may mean that he will now be legally bound to do that. The reverse is possible too.

Breach of contract can occur due to many reasons. With the bilateral agreement, both parties will suffer if the agreement is not fulfilled. It is more of a symbiotic relationship.

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